Wait and see investors, SUN Benchmark depressed. Investors are taking a wait and see attitude, waiting for the results of BI’s RDG which is projected to raise the FFR by 25Bps-50Bps, based on a Bloomberg survey. Meanwhile, the yield on UST10Y again surpassed the 4% level or reached its highest level since mid-2008, as housing data has not been able to contain the Hawkish stance of the Fed. Data shows US Housing Starts Sept. up by 1.4 million (Vs. Aug. 1.6 million); affected by the high Mortgage Rates, along with the increase in FFR in 2022. Furthermore, the Fed is planned to raise the FFR by 75 bps for the fourth time in a row at the FOMC meeting next November.
Corporate Bonds
PNM Bonds Earn idAA Ratings. Bonds belonging to PT Permodalan Nasional Madani (PNM) which will mature have received an idAA rating from PT Pemeringkat Efek Indonesia (Pefindo). Meanwhile, the bonds are Continuous Bonds V Phase I/2021 Series A which has a principal value of IDR 1 trillion. These bonds will mature on December 20, 2022. (Kontan)
Domestic Issue
BI Cuts Indonesia’s Inflation Projection. Bank Indonesia (BI) cut Indonesia’s inflation projection in 2022 to 6.3% YoY. Previously, BI projected inflation at the level of 6.6% – 6.7%. Although BI’s latest inflation projection is lower, it still exceeds the upper limit of the target range of 4% YoY. In more detail, the source of the current increase in Indonesia’s inflation is the price adjustment of subsidized fuel oil (BBM) in September 2022. In addition, there is also an increase in food inflation. (Kontan)
Recommendation
Investors anticipate Hawkish BI 7DRR. BI’s decision to revise down the 2022 inflation target to 6.3% YoY; or 30Bps-40Bps lower than the previous target of 6.6%-6.7%; indicating the potential for continued tight monetary policy by BI in the rest of the year. Besides Indonesia Headline Inflation Oct. which has approached 6% y/y, and surpassed 1% m/m, BI should also anticipate Strong Dollar sentiment, with DXY holding on to a high of 113 points (Vs. Highest Level 114), ahead of talk of a +75Bps FFR hike in early November. The high global uncertainty has made investors interested in USD safe haven instruments, making the Rupiah close to the level of IDR15,500/USD this week.
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